Even after a KPMG forensic report in October cleared Silvercorp Metals (SVM-T, SVM-N) of anonymous allegations of accounting fraud, China’s largest primary silver producer has announced that it has retained two independent consulting firms (AMC Mining Consultants and Golder Associates) to prepare updated National Instrument 43-101 reports on four of its properties in China.
“The company, by using these internationally recognized firms in 2012 to update its technical reports, intends to ensure that there is brand name verification of its resource and reserve estimates; which helps alleviate any concerns that may linger from the anonymous third party allegations circulated in 2011,” Silvercorp outlined in a press release on Dec. 29.
The new independent technical reports will also incorporate additional exploration and development work the silver producer has completed over the last fiscal year, including 186,627 metres of underground and surface drilling.
Silvercorp has four silver-lead-zinc mines in the Ying mining district of China’s Henan province and recently acquired the nearby XBG and XHP silver-gold-lead-zinc mines as well. Production is also underway at its BYP gold-lead-zinc project in Hunan province and the company is building the mill and related facilities in preparation for mining at its GC silver-lead-zinc project in the southern province of Guangdong. In addition, Silvercorp is preparing an application for a small mine permit in Canada for the high-grade Silvertip silver-lead-zinc mine project in northern British Columbia.
On Dec. 20, Silvercorp announced that Chinese law enforcement agents have opened a criminal case to investigate and find “the creators of false and fraudulent reports by anonymous parties such as IFRA, Alfred Little and others, attacking Silvercorp and its Chinese subsidiaries.”
In September the company also filed a lawsuit in New York County Supreme Court “charging defendants Chinastockwatch.com, Jerry Katz, Alfredlittle.com, Alfred Little, Simon Moore, and several “John Doe” defendants with spreading “false, defamatory and fraudulent” information about Silvercorp on the Internet and in letters to the media and regulators.” It has filed two separate actions in British Columbia.
The KPMG report found that the cash and short-term investment balances Silvercorp reported on Dec. 31 2010 and Mar. 31 2011 were both substantially correct, and that the mining company’s procedures did not support allegations of inflated revenues.
In Toronto Silvercorp shares are trading at about $6.55 apiece within a 52-week trading range of $5.81-$15.60 per share.
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